The 2022 Global Food Price Shock in Chile and Colombia

World Bank

The 2022 Global Food Price Shock in Chile and Colombia

Autores

World Bank

Editor

Washington, DC: World Bank

Descripción

This note uses transaction level customs data for Chile and Colombia to provide insights into food price transmission from global markets to import prices. This is a non-trivial relationship with significant cross-country variation that is relevant for policy design for the management of future shocks. Transaction level data makes it possible to look beyond average prices at underlying dynamics in terms of import prices, volumes, origins, etc. Focusing on price movements for wheat and maize during 2021-2022, a time of significant price variation in global markets, the note finds that exchange rate depreciation contributed significantly to rising import prices in local currency in Chile and Colombia. There were also significant differences in world price transmission between the two countries, with increases in median import prices materializing later for Chile but persisting longer. Neither country was able to significantly mitigate global market price increases through short-term adjustments of the times of purchase. Regional trade had a significant stabilizing role on import prices for both countries as import prices from regional trading partners increased less than global prices. Increases in global transport and fuel costs, on top of already high levels in 2021, accounted for significant shares of the import price increase in wheat in both countries. Finally, import structures changed somewhat during 2022, with potential implications for price transmission to consumers due to higher price dispersion and importer concentration observed for Chile.